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Key Points

India's economy is showing strong signs of growth with projected GDP expansion of 6.8-7% for the April-June quarter. The growth is primarily driven by higher discretionary spending that's fueling demand-led expansion across sectors. However, researchers express concern about muted private capital expenditure despite robust government spending. The report also highlights potential challenges from US tariffs that could impact earnings in the coming quarters.

Key Points: India GDP Growth Forecast 6.8-7% April-June Quarter FY26

  • India's GDP expected to grow 6.8-7% in Q1 FY26 driven by demand
  • GVA growth estimated at 6.5% with narrowing real-nominal gap
  • Private capex remains muted despite high government spending
  • US tariffs likely to negatively impact earnings for next two quarters
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India's GDP likely to grow 6.8-7 pc in April-June: Report

SBI Research projects India's Q1 FY26 GDP growth at 6.8-7%, driven by higher discretionary spending but notes muted private capex concerns.

"Private investment must complement public investment to take the economy onto an even higher sustainable growth path - SBI Research Report"

New Delhi, Aug 21

India’s GDP is expected to grow between 6.8 per cent-7 per cent in the first quarter this fiscal (Q1 FY26), due to higher discretionary spending which will drive demand-led growth in the country, a report said on Thursday.

The gross value added (GVA) growth is estimated at 6.5 per cent for the quarter, SBI Research said, adding that the gap between real and nominal growth will significantly narrow in Q1 FY26.

The peak elasticity of government capital expenditure to GDP has reached 1.17, making it imperative for private investment to support public capital expenditure for sustainable growth, according to the State Bank of India’s research arm.

“A major source of concern for sustainable growth is the muted private capex. We believe that numbers may further decline as US tariffs may significantly impact the capex. Private investment must complement public investment to take the economy onto an even higher sustainable growth path,” the report noted.

The global economy has continued to hold steady, but the composition of activity points to distortions from tariffs rather than underlying robustness, the report added.

The International Monetary Fund (IMF) has revised upwards the global growth projections to 3 per cent for 2025 and 3.1 per cent in 2026 reflecting primarily front-loading ahead of tariff materialisation. Further, it revised upwards India's growth estimation by 20 bps to 6.4 per cent and China's by 80 bps to 4.8 per cent.

During the quarter, Indian Inc., which has approximately 4,300 listed entities, reported 4.7 per cent growth and 6.7 per cent EBIDTA growth, compared to 11 per cent EBIDTA growth the previous quarter.

SBI Research found that due to the fresh resumption of tariffs on Indian exports, the earnings outlook is likely to be negative for the next two quarters.

However, GST 2.0 can give a fillip to the consumption-orientated sector and offset the impact, it noted.

- IANS

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Reader Comments

P
Priya S
The private investment concern is real. Many companies are still hesitant to invest despite government push. Need better policy stability and easier compliance to boost private capex 💼
A
Aman W
GST 2.0 can't come soon enough! The current system needs simplification, especially for small businesses. If implemented well, it could really boost consumption and help offset tariff impacts 🛒
S
Sarah B
Working in export sector and already feeling the tariff pressure. Hope government negotiates better trade deals and provides support to affected industries. Growth numbers look good but ground reality different for some sectors 😕
V
Vikram M
Good that IMF revised India's growth projection upwards. We're performing better than many developed economies despite global challenges. Just need to address the private investment gap now 💪
N
Nikhil C
While the headline numbers are positive, the EBIDTA growth decline from 11% to 6.7% is concerning. Shows corporate profitability under pressure. Hope next quarters show improvement 📊

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